Y’all Street

Which Texas stocks beat the bull market—and which were simply full of bull?

IF IT HAS BEEN A GREAT YEAR FOR U.S. STOCKS, it’s been even better for Texas stocks: They were up more than 42 percent from May 1, 1997, to April 30, 1998, beating the Standard & Poor’s 500 even as America’s long-running bull market stampeded. Don’t believe it? Compare what might be called the Texas Index ( TI)—the performance of the state’s 650 publicly traded stocks—to the S&P 500. Few other states—or even countries—can match our superior performance.

What’s behind this success? Big, booming stocks, and Texas has more of them than almost anyplace else. Different indexes are constructed using different criteria, but the TI—like the S&P 500—relies on “capitalization weighting.” Indexes like these determine a stock’s “market capitalization”—how much a company is worth—by multiplying a single share’s price by the number of shares outstanding. Each stock is weighted within the index by its capitalization, so that big stocks have more impact than small stocks; that’s where the dollars are.

But the TI differs from the S&P 500 in that it has more stocks: 650. The S&P 500 is an index of some but not all of the very largest U.S. stocks; it’s a specific list handpicked by Standard & Poor’s. Many important U.S. stocks aren’t in the S&P 500, including Berkshire Hathaway, America Online, and Safeway. By contrast, the TI is composed of all Texas stocks that are publicly traded—not only the largest ones, but the smallest ones too.

Safe Bets

Most Texas stocks rose over the past year, but these seven stood out. The first three were remarkable for their sheer size and impressive gains, the next two for their spectacular returns, and the last two for their potential.

Dell Computer Corporation ( DELL NASDAQ)
Up 272 percent. Share price on April 30: 80 3⁄4.

Round Rock—based Dell has been as big a Texas success story as they come, outpacing monoliths Microsoft, Coca-Cola, and Intel. Its annual revenue—$12.3 billion last year—passed that of IBM, making it the world’s second-largest PC maker (Houston’s Compaq is the largest). Dell isn’t cheap, but its explosive international growth and pioneering strategy help justify the price. The assumption is that the company won’t just survive but thrive. For the Dell faithful, that confidence has been greatly rewarded.

Exxon Corporation ( XON NYSE)
Up 34 percent. Share price

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